Recession Watch: Inflation Spikes, Citi Comes Clean

Now that Wall Street investment banks are trying to one-up each
other by
shouting "RECESSION!", the news has actually been pretty good
of late. Until today.

Inflation spikes. Your money is now losing value at a
rate of 4.2% per year. This means that 1) Bernanke was
smart to only cut rates 25 basis points this week, despite Wall
Street's whines, and 2) Bernanke is going to have a harder time
bailing the market out.

Citigroup stops
pretending it doesn't own those hideous mortgage SIVs and
moves them on to its balance sheet. The awful mortgage
bets are old news, but the acknowledgement that Citi is indeed
responsible for them will put more pressure on its capital
ratios (banks have to maintain a certain level of equity to
debt). It will also put more pressure on other banks to end the
charade and follow suit.